Nvidia Outbids Intel for Mellanox - Reuters via Calcalist

Credit: NvidiaCredit: NvidiaReuters, via financial news outlet Calcalist, reports that Nvidia has outbid Intel in an attempt to buy the networking behemoth Mellanox. Previous unconfirmed reports claimed that Intel had offered $6 billion for Mellanox, but Nvidia has reportedly outbid the company by more than 10 percent. These offers come after Mellanox essentially offered itself for sale in October 2018, which reportedly also garnered attention from Microsoft and Xilinx.

Mellanox specializes in Ethernet and InfiniBand networking products for the data center. The company currently has a market cap of $5.93 billion and a commanding presence in the data center, but Intel's purported attempt at purchasing the company could run afoul of regulators. Intel already has a heavy presence in the InfiniBand market through its line of products that come as the fruit of its $125 million acquisition of QLogic's IP back in 2012, while Mellanox is the only large-scale competitor.  

Nvidia's play at Mellanox would help the company diversify into networking, thus reducing its heavy reliance upon graphics cards sales. The Mellanox IP could also tie in well with its strategy to increase its penetration into the data center, and Reuters predicts the company wouldn't face the same regulatory concerns as Intel.

Mellanox would also fold into Intel's portfolio nicely. Intel has spent several years transitioning away from being a PC-centric business to other profitable climes, such as data storage, memory, IoT, and 5G. Intel's overall goal is to leverage its commanding presence in the data center, estimated at ~95% of the worlds server sockets, to expand into these new adjacencies quickly. Networking is the glue that ties many of these critical components together, making the Mellanox portfolio a natural fit.

As expected, Nvidia, Intel, and Mellanox have not commented publicly on the bids.